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Fed Beige Book Review

Fed Beige Book Review

January 17, 2018

The Federal Reserve today released findings from its latest survey of regional economic conditions, known as the Beige Book. It does this about two weeks prior to each of the eight scheduled FOMC meetings of the year. The latest report covers the period from roughly Thanksgiving to endyear.

Economic growth was characterized a moderate in in six Federal Reserve districts, modest in five districts and robust in the Dallas district that covers all of Texas plus southern Louisiana and southern New Mexico. Regionally, the “modestly” growing areas encompass a broad south-easterly swatch of territory running from Wyoming to Florida, plus the Northeast minus the New York district but including the Boston and Philly districts. The Dallas Fed’s robust characterization was an upgrade. Besides New York, moderate growth was found in the Cleveland, Minneapolis, Richmond, and San Francisco Districts (the latter covering the West).

Price movement has been mixed lately. Retail prices remain subdued. Manufacturers and construction face rising input costs but in certain instances have been above to pass on the increases. Wage growth has accelerated but is still considered essentially modest and lower than what overall tight labor might conditions historically produced. A slowdown in jobs growth last month is not expected to endure.

The recently passed tax bill is expected to stimulate economic growth somewhat in 2018. So all in all, the report seems consistent with at least three increases this year of the federal funds rate and doesn’t preclude the possibility of more hikes.